Displaying items by tag: European Union

Australia: Research by the Global Carbon Budget (GCB) forecasts that CO2 emissions will grow by 2.7% year-on-year to a 37.1 ± 2 Gt CO2 in 2018. This follows a rise of 1.6% to 36.2Gt after a three-year hiatus with stable global emissions. The 2018 forecast is based on preliminary data for the first 6 – 9 months indicate a renewed growth in fossil CO2 emissions based on national emission projections for China, the US, the European Union (EU) and India and projections of gross domestic product corrected for recent changes in the carbon intensity of the economy for the rest of the world.

In 2017 the GCB estimates that cement sector constituted 4% of global fossil CO2 emissions, a rise of 1.2% from 2016. Emissions are expected to grow by 4% in China in 2018, in part due to a 1% rise in cement production. In the EU emissions are projected to fall by 0.7% with stable cement sector emissions. In India emissions are forecast to increase by 6.3% with a 13.4% rise in cement sector emissions.

Fossil CO2 emissions are based on energy statistics and cement production data. The research makes its estimate of emissions from the cement industry using a method adapted from a paper published by Robbie M Andrew of Norway’s CICERO Center for International Climate Research in 2017.

Well, it turns out that the European cement industry wasn’t kidding when it raised the risks of the climate mitigation on the sector. This week three (!) integrated plants have been earmarked for closure.

Cementa in Sweden said that it was considering closing its Degerhamn plant due to increased environmental regulations. Today, local press in Spain is reporting that Cemex España is planning to shut down two of its plants. These are plants in different parts of Europe with different local market dynamics but both are within the European Union (EU). That’s three plants closing out of 219 in the EU, or a loss of around 1% of production capacity.

Last week’s column on the United Nations’ (UN) Intergovernmental Panel on Climate Change (IPCC) report on Global Warming raised the way the cement sector is tackling climate change and the existing and impending legislation. President of the German Cement Works Association (VDZ) Christian Knell’s opening words at the VDZ Congress in September 2018 seem prescient. He said, “To be able to realise our efforts in terms of climate protection and at the same time not to lose competitiveness, we need research policy-related support for our investment in breakthrough technologies and the corresponding demonstration projects.” The add-on was that the industry needed to focus on how the development of carbon abatement technologies can meet the 2050 climate goals and, specifically, that suitable boundary conditions would have to be created. The press releases accompanying his speech emphasised that, “on-going trends in European emissions trading and the ‘rapidly increasing’ price of CO2 were already today leading to considerable costs for cement manufacturers.”

These words are similar to the comments Albert Scheuer, a board member of HeidelbergCement, made at the Innovation in Industrial Carbon Capture Conference early in 2018 about dividing the mounting environmental costs of cement and concrete between producers and society in general. Considering how much cementitious building materials most people use throughout their lives compared to the relative low price of cement, this argument carries some weight. In addition, the sustainability credentials of concrete buildings through longer lifespan and durability through extreme weather events is another argument that industry advocates such as the Portland Cement Association (PCA) in the US have been hawking in recent years.

Cementa, a subsidiary of HeidelbergCement, blamed anticipated tightening of environmental regulations for its decision. Although it said that the plant had made improvements over the years, the expected difficulty (read: cost) to make further improvements was becoming too hard. Shifting production to the company’s other two plants in the region, Slite on Gotland and Brevik in Norway, will reduce CO2 emissions by 260,000t/yr.

In Spain, the news from Cemex follows a half-year report from Oficemen, the local cement association, that predicted growth for the year but not as fast as previously expected. The problem was that continued declines in the export market, the 13th decline month-by-month in a row, offset the domestic growth. Oficement president Jesús Ortiz also took time to blame rising electricity costs, expected to rise by 20% year-on-year by the end of 2018.

Market issues in Spain aren’t in doubt, but the real question for both Sweden and Spain is whether EU CO2 legislation right now is causing cement producers to shut plants. The CO2 emissions allowance price hit a high of Euro22/t in September 2018, the highest price in a decade. Allowances have stayed below Euro10/t since 2011 and the price has more than doubled in 2018. Throw in the mood music of the IPCC and the trend seems irresistible. How many more plants in Europe are at risk to shut next? No doubt the European cement producers have charts marking the viability of their plants against the CO2 price. This would be a very interesting graph to get our hands on.

The 2nd FutureCem Conference on CO2 reduction strategies for the cement industry will take place in May 2019 in London, UK

The rumours were confirmed yesterday when the UK’s Breedon Group announced its acquisition of Ireland’s Lagan Cement. The price was Euro527m, which Breedon will finance with a combination of a new loan, extended credit and an equity placing. The assets it will gain include a cement plant in Kinnegad, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants.

Breedon said that its strategy is to continue buying businesses in the heavyside construction materials market. At a stroke, once the deal completes on 20 April 2018, it becomes an international company. From the cement perspective it gains a new 0.7Mt/yr plant in central Ireland and a terminal in Belfast, UK. The UK Competition and Markets Authority (CMA) wasn’t mentioned in Breedon’s press release on the purchase but it seems unlikely that the competition body would have much to say on the transaction. Lagan Cement does hold ready-mix concrete (RMX) plants, aggregate and asphalt assets in Northern Ireland but these are far away from Breedon’s operations in mainland Britain. That said, the CMA did force Breedon to sell 14 RMX sites when it bought Hope Construction Materials in 2016. Generally speaking, Breedon’s enlargement reduces the diversity of the UK cement industry on the smaller end leaving only Quinn Cement, with operations on both sides of the border, as the country’s sole remaining single site clinker producer.

Aside from geographical expansion, becoming an international building materials company may offer Breedon Group some security from the UK’s exit from the European Union (EU) (so called Brexit). Breedon will join CRH as the only two cement producers with production facilities in both the UK and Ireland. The strategic significance of the position Breedon and CRH are in geographically may arise from whatever deal is reached between the EU and the UK and the significance of the UK’s only land border with the EU. LafargeHolcim is nearly in this club with its plants in England and Northern Ireland and plenty of the other local producers straddle the UK-EU border with terminals or production facilities elsewhere. Yet, in an uncertain Brexit negotiation, having kilns on both sides of the line might come in handy once (or if) the politicians make a decision.

Although, if Liam McCaffrey, the chief executive officer of Quinn Industrial Holding, is to be believed, then Brexit will have little impact at all other than (low) tariffs in a worst case scenario. He said to local press that although damage to the construction industry might arise in the UK from a prolonged recession, the UK’s housing shortage and reliance on imported building materials would probably see it through. That point about a possible financial downturn is important to Breedon Group, given the new debt it will be taking on to pay for acquisition. This is something that will be familiar to Breedon’s competitor Cemex. It is still paying off the debts from its acquisition of Rinker in 2007.

Breedon has decided to delay the release of its interim results from mid-July to September 2018 to allow time for the integration of Lagan into the group. Its sales and earnings may dwarf those from 2017 that it described as ‘one of the most productive years’ in its history. In the meantime congratulations are in order for Breedon Group for ensuring that the UK cement sector is never dull.

Ireland: Liam McCaffrey, the chief executive officer of Quinn Industrial Holdings does not expect Brexit to slow growth. He said that the most damage could arise from a prolonged recession in the UK, although he though it was unlikely, as reported bythe Irish Times newspaper. He added that the UK has a housing shortage and it relies on imports for building materials. In his estimation the worst-case scenario would be a tariffs on building materials but these, if they happened at all, are expected to be low.

The building materials producer and owner of Quinn Building Products reported that its turnover grew by 7.4% year-on-year to Euro209m in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBTIDA) increased by 31% to Euro23.9m.

“Despite the significant macro-economic challenges posed by Brexit, we continue to invest, grow sales, innovate and drive margin growth. Encouragingly, volume growth trends from 2017 are continuing year to date in 2018 and, at this point, we are firmly on track to deliver our fourth successive year of strong earnings growth,” said McCaffrey.

Two reports out this week have looked at the carbon footprint of the cement industry. The first, a technology roadmap by the Cement Sustainability Initiative (CSI) and the International Energy Agency (IEA), laid out a technology pathway for the sector to reduce its direct CO2 by 24% from current levels by 2050 to meet the IEA’s 2°C scenario (2DS). The second, a report by the CDP (formerly the Carbon Disclosure Project) on the progress of 13 major cement producers to reduce their emissions, was a progress report on the business readiness for a low carbon economy transition.

The scene was set last week when the environmental campaign group Sandbag picked up on the latest emission data from the European Union (EU) Emissions Trading Scheme (ETS). Industrial emissions as a whole rose by 2% year-on-year to 743Mt in 2017. The cement and lime industry reported a rise of 3% to 148Mt in 2017 from 144Mt in 2016. As Sandbag reported, industrial emissions have remained ‘stubbornly high’ for the duration of the ETS. It then went on to say that, “the EU urgently needs a new industrial strategy to bring about radical industrial process changes and/or carbon capture and storage, especially for the high-emitting steel and cement sectors.”

The CDP’s report provided a global scorecard on the readiness of the cement industry to adapt to a low-carbon future. Unfortunately, the report used data from self-reporting questionnaires and it lacked data from the two largest Chinese cement producers, Anhui Conch and China National Building Materials (CNBM), although it did try to compensate for this. The CDP assessed companies across four key areas aligned with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).

Surprisingly, the study, even with its limitations, found regional variation. As can be seen in Graph 2, the Indian cement producers came out on top from the criteria used: transition risks, physical risks, transition opportunities and climate governance and strategy. CDP pinned this on better access to alternative materials such as fly ash and slag coming from other carbon intensive sectors, such as thermal power generation and steel production. Reported process emissions measured by the clinker ratio for the Indian companies was 69% versus 78% for the other companies. They also benefited from newer cement plants driven by high market growth in the region compared to older plants in Europe.

The technology roadmap from the CSI and the IEA set out key actions for the industry to take by 2030 to have at least a 50% chance of achieving the 2°C 2DS scenario followed by a possible transition pathway that could be achieved through technology, legislation and investment. The key actions are protecting carbon pricing mechanisms from carbon leakage, putting new technology into action and supporting it by legislation, and greater government support for products with a lower clinker factor.

The CSI’s and IEA’s targets for 2030 included reaching a clinker to cement ratio of 0.64 in 2030 from 0.65 in 2014, a thermal energy intensity of clinker of 3.3GJ/t from 3.5GJ/t, an electricity intensity of cement of 87kWh/t from 91kWh/t and a alternative fuel co-processing rate of 17.5% from 5.6%. Perhaps the most optimistic is a CO2 capture and storage amount of 14MtCO2/yr in 2030 from nothing at the moment. This last target seems unlikely to be achieved given the lack of projects outside of the pilot stage, but it’s not impossible.

This column barely touches on the detail within either report or even the latest data from the EU ETS. Both reports offer ways forward to meet the 2°C global warming target outlined in the Paris Agreement. It’s easy to be pessimistic given the on-going clash between environmental optimism and business logic but both reports offer a way forward. The CDP report sets out a baseline with a look to the future, whilst the CSI/IEA roadmap offers what it says is a realistic route to reach that 2DS target. Lastly, if the CDP’s assessment is correct about the Indian producers then it’s possible that other developing cement industries may inherently be cleaner due to their use of newer plants and equipment. If worldwide government support can be provided for use of alternative fuels and materials on a much larger scale, as well as all the other recommendations, then meeting the Paris agreement may be easier than expected as new markets build new production capacity.

Two examples of carbon capture utilisation and sequestration projects will be covered in the May 2018 issue of Global Cement Magazine

Belgium: HeidelbergCement has hosted a ground breaking ceremony for the Calix carbon capture pilot at CBR’s cement plant at Lixhe. The ceremony itself took place at the Liège Oupeye Water Treatment Plant near Liège as part of the inaugural Innovation in Industrial Carbon Capture Conference. The two-day event, which took place on 7 – 8 February 2018, was organised by the Low Emissions Intensity Lime And Cement (LEILAC) Consortium, a European Union (EU) Horizon 2020 backed research and innovation project.

Construction work on the pilot at the cement plant is scheduled to start imminently. The project will test Calix’s carbon capture technology for two years at an operational cement plant. The technology has previously been used in the magnesite calcining sector.

Over 130 delegates from industry, academia and government attended the conference. The agenda was designed to encourage discussion and knowledge sharing across key stakeholder groups with a strategic interest in innovation in carbon capture technology. As part of the programme, the wider challenges faced by the cement and lime sectors in Europe were also explored focusing on how EU industries can contribute to reaching climate change targets, the role of innovation and company entrepreneurship and a knowledge exchange fair on technology.

The LEILAC consortium, which consists of representatives from the lime and cement industries, technology and engineering providers and research institutes, has set up as an industrial project securing Euro12m in EU funding in order to demonstrate technology to reduce carbon emissions from cement and lime industries.

Belarus: The Belarusian Cement Company increased its exports of cement by 42.6% year-on-year to 1.4Mt/yr in 2017. The exported cement had a value of US$682.m, according to the Belarusian Telegraph Agency. The company has attributed the rise on an efficiency drive that it says has reduced the cost of production by 50%. The company mainly exports to the Commonwealth of Independent States region but it has started selling its product in parts of the European Union, including Poland and Latvia. It plans to increases its exports by 4% in 2018, partly by introducing 35kg bags.

This week’s Plastics Strategy from the European Commission (EC) presents the cement industry with a narrowing target. If the Plastics Strategy is successful it will prevent plastics waste altogether. This will then eliminate the key calorific content of refuse-derived fuels (RDF) and disrupt co-processing supply chains at cement plants across the continent. If it is too lax then dumping plastics in landfill could become more economically viable, also changing the market dynamic. Neither extreme looks likely at this stage but the European cement industry needs to make its views known.

Cembureau, the European cement association, has done just that today with the publication of a position paper on the subject. It conveniently ignores the top two tiers of the waste hierarchy – prevention and re-use – but it does recognise that ‘high quality recycling’ is the preferred option. This is followed by the target of its lobbying: protecting co-processing. Make no mistake, this is supporting industrial behaviour change with solid environmental benefits. Its areas for policymakers to focus on include protecting co-processing: a ban on landfill; linking energy recovery to recycling; concentrating on the legislation; thinking about material lifespan sustainability benefits; and helping minimise the investment costs for processing facilities.

Providing cool heads prevail, the importance of co-processing plastics as part of any realistic plastics strategy seems unlikely to change any time soon. What’s more likely to be the real target for Cembureau is standardising measures on collection, sorting and material recovery across the European Union (EU). For example, as this column has reported twice in 2017 (GCW288 and GCW324), the issues with waste disposal legislation in Italy have led to various problems in the sector. Waste collectors found it easier to export RDF to Morocco from Italy rather than use it locally in 2016. The slag industry has also reported similar issues with reuse in Italy. The consolidation of the local cement industry following the takeover of Italcementi and Cementir by HeidelbergCement and of Cementizillo by Buzzi Unicem should present a more unified industry approach towards alternative fuels. Backup from the EC could solve the other half of the alternative fuels puzzle in Italy and help to deliver serious change. Ecofys data from 2014 showed the EU co-processing average rate as being 41%, with six countries – Ireland, Portugal, Spain, Bulgaria, Italy and Greece – having rates below 30%.

Vagner Maringolo of Cembureau outlined the market opportunities for waste uptake at cement plants at the 11th Global CemFuels Conference that took place in Barcelona in February 2017. He started by revealing that plastics represented over 40% of the total share of alternative fuels used in the EU in 2014. A ban on landfilling municipal waste was expected to boost the supply of RDF and a Cembureau/Ecofys study on the market potential of alternative fuels concluded that around 10Mt of waste was co-processed in cement kilns in the EU28 in 2015. This represented around 2% of total combustible waste each year but it represented 10% of all of the energy recovery from waste in the EU. In other words co-processing plastics waste offers a very attractive means for the EU to meet its sustainability targets.

However, before Cembureau and the cement industry starts popping the (reusable) champagne corks, consider the wider picture. China has banned imports of foreign waste in 2018 including RDF from the UK, a major exporter. Unless new markets are found this may impact the price of RDF in Europe. Brexit is another example how of European waste markets might be disrupted in the medium-term. Cement producers want a steady supply of cheap fuels but if the providers can’t make enough money from their products then the market will fail. The tightrope for Cembureau to walk with plastics is to promote RDF use and secure its supply. Persuading the EC to support this may involve some wobbling along the way.

Belgium: Cembureau, the European cement association, has published a position paper outlining its stance European Commission’s plastics strategy. The association wants policymakers to ensure any plastic waste that has a calorific value that can be recovered as a fuel source is not landfilled. At present there are differences in waste management policies across the member states of the European Union.

Other points that Cemburea wants to highlight include: a ban on landfill of recoverable and recyclable waste; recognition that cement plants can treat different waste streams such as plastics and simultaneously recycle them as material in the manufacturing process of cement and recover them as energy; the specific relevance that co-processing offers the unique opportunity of a simultaneous energy and material recovery; and the potential to minimise investment costs in dedicated facilities.

In January 2018, the European Commission published a dedicated Plastics Strategy as part of the Circular Economy package. The strategy indicates that there is currently a low rate of recycling or reuse of plastics with most of it going to landfill or used in incinerators.

Recent data from Cemsuisse, the Swiss Cement Industry Association, shows that cement shipments fell by 2.8% year-on-year to 4.3Mt in 2017. The local industry has fluctuated from a high of just below 4.7Mt in 2011 with various peaks and troughs since then as can be seen in Graph 1. The current drop has been blamed on a poor start and end to 2017 despite some rallying activity in the third quarter.

The local industry tends to get overlooked somewhat due to its modest size, its geographically landlocked position and its exclusion from the European Union (EU) despite being surrounded by member states. This is a mistake though because the territory offers lessons on how a developed cement industry can function and co-exist with a large neighbour. In Switzerland’s case it has access to the EU market through a series of bilateral agreements that provide parity with EU legislation. After a potential crisis over immigration following a local referendum in 2014, Switzerland and the EU came to an agreement in 2016 that softened the labour rules for foreigners. Pertinent to the cement industry, the EU and Switzerland signed a deal to link emissions trading systems in 2017. It is currently anticipated to come into force in 2019. Trading in the EU may come at the price of free movement of labour but emissions trading parity will also help to protect Switzerland’s cement plants.

The country has a cement production capacity of 4.3Mt/yr according to Global Cement Directory 2017 data. This divides into three plants operated by LafargeHolcim, two by Ireland’s CRH’s local subsidiary Jura Cement and one by Vigier Cement, a subsidiary of France’s Vicat. Most of these plants are around the 0.8Mt/yr mark, with the exception of Jura’s smaller Cornaux plant.

After a strong performance in 2016 with growing cement sales volumes, LafargeHolcim started 2017 with continued positive cement sales but this failed to compensate for low aggregate sales and falling ready-mix (RMX) concrete sales. CRH reported a similar experience that it blamed on poor weather at the start of the year and a competitive environment. This then led to an 8% fall in cement sales in the first nine months of 2017 with RMX sales and operating profit down too. Vicat’s experience in the country followed that of its competitors, with cement sales rising slightly over the first three quarters but concrete and aggregate sales dropping. Among other reasons it blamed the situation on the completion of road and civil engineering projects.

Cembureau, the European Cement Association of which Cemsuisse is a member, forecast a stable year in 2017 following the wind-down of infrastructure projects with support from the housing sector. However, it then expected the market to soften as demographic trends saw slower growth in population reduce housing demand. This state appears to have arrived early. On the plus side though the industry’s sustainability credentials have grown as the split between truck and train transport of cement hit its highest ratio in favour of rail in 2017 at 53%. The trend switched from truck to train in 2013 and it hasn’t looked back since then.

As a mature economy in the heart of Europe, Switzerland generally pops up in the industry news as the home of the world’s largest non-Chinese cement multinational, LafargeHolcim. That company’s headquarters are in Jona and Holcim had its headquarters in Holderbank. LafargeHolcim’s single largest shareholder, with an 11% share, is the Swiss billionaire Thomas Schmidheiny, who inherited his portion of the family business. He notably called for a better deal for Holcim during the merger negotiations between Lafarge and Holcim in 2015 and boardroom struggles have dogged the combined company ever since. Consideration should also be granted to the country’s other engineering and construction industry related multinationals such as ABB, Sika and the like. By the numbers Switzerland has a case for being one of the world’s most important nations for the cement industry.